Price indices outstrip cost index

Citation

(2002), "Price indices outstrip cost index", Property Management, Vol. 20 No. 5. https://doi.org/10.1108/pm.2002.11320eab.007

Price indices outstrip cost index

Price indices outstrip cost index

The Private Housing Maintenance Price Indices continue to rise more rapidly than the BMI Private Sector Cost Index, according to the latest edition of the BMI Quarterly Cost Briefing.

Building Maintenance Information (BMI) started monitoring the prices paid to contractors for maintenance work in 1998, and apart from a brief period in late 1998, the prices charged by contractors for carrying out work for private householders have consistently risen faster than the associated costs.

While the costs to contractors of carrying out work in the private sector have risen by 28.4 per cent since first quarter of 1998, and by 10.5 per cent since first quarter of 2000, the prices charged to householders have risen by an average of 50.8 per cent and 16.8 per cent over the same periods (see Figure 1).

The reasons for the large differences between the cost and price indices are uncertain but may be due to the combination of the rapid growth in the home improvements industry and the shortage of suitably qualified tradesmen.

Figure 1. Cost/price index comparison

The BMI Bulletin 312 – BMI Quarterly Briefing of Maintenance Costs is available as part of the BMI Bulletin Service or individually, price £85.